Thanks to my friend Kathie for this shirt, I now have a little dress. I love that it already had a band around the waist and now fits perfect as a hip band on a dress.
Here's how the shirt began. I hemmed up the sleeves/shoulders, took in the sides from the armpits down to the hip band (leaving the bottom un-hemmed for some flair), and took off the collar. It really was simple adjustments to make this work for my girly. I totally think you should try it.
(ps i hemmed the right sleeve top on this already...and then remembered that i wanted to take a picture first )